The evolution of high incomes in Canada, 1920-2000

Atkinson’s series focus on inequality within the top decile (such as the share of the top decile income accruing to the top percentile) and not on top income shares relative to the average in the population as we do here. [...] The higher the group, the sharper is the decline during World War II, and the sharper the recovery since the late 1970s. [...] The remainder of the paper will be aimed at understanding the three key facts: the counter-cyclical pattern of top shares (except the very top share) in the pre-war period, the sharp fall of top shares during World War II (with the most dramatic decline at the very top) with no recovery after the war, and the surge in top income shares over the last 20 years (characterized by an extreme concentrat [...] Finally, two facts show that the decline of the share of capital income for the top 0.5% reflects a fall in large capital holdings (relative to the average) rather than a decline in the aggregate capital income in the economy. [...] For example, Slemrod (1996) shows that about one third of the jump in the top income shares in the United States from 1986 to 1988 is due to shifts from the corporate sector to the personal sector (as the top personal tax rate became lower than the corporate tax rate after 1987).